developments have shaped the world of investors, analysts and IROs
A time-travelling IRO
from just 25 years ago would barely recognize today’s online,
networked world of webcasts, tweets, blogs, apps, instant Edgar
filings and XBRL tags where immediacy, accessibility and global reach
are taken for granted.
Veteran practitioners recall with a chuckle the image of bicycle
messengers fanning out across Manhattan to hand-deliver press releases
printed on embossed company stationery while the mailroom stamped and
stuffed envelopes for the wider world.
In a quarterly release ritual charitably described as ‘arcane’, the
most technologically advanced IR departments would reserve the fax
machine for the day.
But early fax machines were capable of sending to only one recipient
at a time so IROs would have to choose, transmitting to the Dow Wire
ahead of Reuters one quarter and reversing the order the next while
steeling themselves for a profanity-laden tongue-lashing from the
The wire services would then retype the earnings, shooting a headline
EPS, followed by revenue and on down the P&L in a slow reveal that
could take several minutes.
Meanwhile, the fax would hum and buzz all day as portfolio managers
waited to get a glimpse of the results. ‘IR used to be a game of days
and weeks,’ observes Bill Haney, global head of IR business at Thomson
Reuters. ‘Now it’s a game of minutes.’
Nor would our calendar-hopping IRO recognize today’s market
environment, increasingly dominated by exchange-traded funds, dark
pools, hedge funds and high-frequency trading (HFT). ‘Previously,
people weren’t looking at screens, blogs or CNBC,’ recalls Tiffany IRO
‘They had the opportunity to think about the results.’ Aaron readily
embraces the advantages of today’s technology but notes that ‘this
incredibly fast flow of information’ creates a climate where analysts
compete to see who can be first with a comment or a note and investors
feel compelled to react to both news and noise.
Aaron’s observations highlight a great irony: as today’s
communications technologies have made company-specific information
more widely available and transparent, markets increasingly value
liquidity and speed above all, and are becoming arguably less attuned
to the increased information flow from firms.
On any given day, more than half the volume of a company’s stock is
traded across multiple markets or dark pools in baskets of securities,
while options are countertraded in baskets of derivatives.
This frenzy of trading, driven by arcane algorithmic formulas, is
increasingly divorced from any information the IRO is sending out.
It’s designed to harvest fractions of pennies of profit in thousandths
of a second, repeated over and over. Individual company tickers simply
become chits, necessary for keeping score.
The wizards who program the gigaflopping supercomputers that drive HFT
seem a different species from the green eye-shaded clerks tapping
price quotes over telegraph wires 150 years ago. But the evolutionary
lineage from ticker tape to HFT is clear: Wall Street’s been ‘plugged
in’ for a long, long time.
The Big Bang creation of modern IR can be traced to two events. In
1965 PR Newswire launched the Investors Research Wire, which sent
corporate news releases directly to brokerage firms and financial
analysts, thus starting us down the path of immediate and ubiquitous
information flow from companies to institutional investors.
Then, in 1967, Wall Street experienced the ‘Back Office Crisis’, when
major exchanges, drowning in paper, were shut down mid-week so brokers
could catch up on processing delays. That crisis opened Wall Street’s
eyes and wallets, bringing computers into the trading environment.
The rest has been mere evolution on the twin themes of increasing
information flow and increasing efficiency of trading, influencing and
being influenced by parallel changes in regulation and market
For example, First Call was launched in 1983 (see timeline, below). In
addition to broadcasting news to the Street, the institutional
information network also raised the visibility of ‘consensus’
earnings, in particular in the eyes of the business press and
By the late 1980s earnings teleconferences had become widespread, most
open only to institutional investors.
At the same time, this increased visibility of the IR process pulled
back the veil on a common practice at the time of talking the numbers
down. While perhaps necessary in a world of bicycle messengers and
mailrooms, it was unacceptable in the increasingly networked world.
It took 14 years, but in the fall of 2000 the SEC implemented
Regulation Fair Disclosure, arguably the single largest change on the
IR landscape in a generation.
The big changes
When asked to name the biggest changes in investor relations brought
about by technology, IROs mention corporate websites and open
teleconferences that have ‘leveled the playing field’ between retail
and institutional investors.
‘That’s a huge positive for the market,’ observes Jane McCahon, who
chaired NIRI when Reg FD was rolled out by the SEC. McCahon, now IRO
at Chicago-based Telephone and Data Systems, also lauds RSS feeds and
Google alerts that let investors self-select what information they
want to be fed. ‘That’s how disclosure should happen,’ she
Teleconferences have also increased the visibility of IR within the
C-suite, observes FedEx IRO Mickey Foster. He describes how, prior to
the advent of conference calls, on the day of earnings management
would present to analysts in New York before Foster hit the road to
other cities for face-to-face meetings.
Today, the chairman and those who report directly to him/her all
gather in a conference room for the quarterly conference call, with IR
front and center orchestrating the entire event. ‘You can engage a lot
more people, and it makes for a richer conversation,’ Foster says.
The proliferation of corporate IR websites and the democratization of
information have armed investors with an unprecedented level of
knowledge before they place that first call to the company. This has
upped the ante for IROs, says Chris Taylor, managing director of
global IR at Ipreo.
In the past, an introductory conversation between the IRO and an
investor or analyst would cover the basics. Now, the buy side and sell
side come already educated and expect to talk to an IRO who is
connected and can take a deep dive into the strategy and nuances of
Both Haney and Taylor see an increasing premium being placed on market
intelligence to restore some balance of power. No longer willing to
settle for obvious ownership data, Haney says IROs are looking for
insights into ownership patterns, explicit or implied relationships
among hedge funds that ‘move in packs’, investors’ hot button issues
and history of activism.
Taylor also says CEOs and CFOs expect the IRO to know enough to ‘put
them in front of people they should be in front of, not waste
In a market where IROs can neither influence nor truly understand
what’s driving the majority of volume in their stock, Haney has heard
some experienced mega-cap IROs ask themselves for the first time:
‘What does my role look like in the future?’ Perhaps XBRL tagging or
crowd-sourced financings will have as large an impact on future IROs
as webcasts and HFT have had on today’s. No one knows for sure.
Mobile apps and tablets will become commonplace in IROs’ briefcases
and may eventually replace the desktop, Haney predicts. It’s already
happening in emerging markets where wireless internet is more
ubiquitous and reliable than wired. McCahon sees technology
potentially enabling a continuous flow of financial information to the
When business is tough, it would be like ‘letting the air out of the
balloon a little at a time,’ she says. Taylor sees a future where
technology enables ‘a more efficient collaboration’ between the buy
side, sell side and public firms that today engage in serial, two-way
Haney predicts that IR will become ‘less hand-to-hand combat’ and sees
parallels in the path the buy side has traveled over the past two
decades. Initially, analysts resisted macro modeling and
formula-driven investing, arguing that their labor-intensive research
to get to know a company could not be replaced by machines.
Today ‘the quantification of the buy side is complete,’ he argues, as
it embraces algorithms and models ‘to inform a largely human process.’
A new, more quantitative IRO will emerge as companies ‘reverse
engineer’ buy-side algorithms to predict how their ownership base will
change as the company evolves, Haney continues, noting that the
transformation is already under way, accelerated by the influx of
former sell-side analysts into the IR role.
Tim Quast, founder of ModernIR, describes a ‘great disconnect’ between
the technology advances on the IR desktop and in the markets. As IR
has been speeding up communication, increasing transparency and
broadening its reach to put information in front of investors, the
markets are moving ‘away from the authority of rational investment
principles to relative value,’ he argues.
He also sees increasing quantification in the IR suite, hoping more
than predicting that IR will move beyond ‘obsession with one piece of
the pie’, the 15 percent-20 percent of volume attributed to its
traditional audience of active investors.
Quast, who advises companies on how market structure affects their
stock, urges IROs to adopt a ‘behavioral approach’ that looks at
multiple data points to better understand the majority of any
individual stock’s daily volume. ‘That’s what institutions are doing,’
he says, and IR will have to adopt a similar approach.
Finally, Aaron warns that tech-obsessed colleagues who measure their
success by how quickly they can get information out ‘are missing the
point’ of good investor relations. The future of IR will be built on
the same fundamentals of building long-term relationships with
investors and analysts, he argues. And for that, there is simply no
substitute for face-to-face communication.
Q4’s Darrell Heaps and
Sheryl Joyce look into their crystal ball
Q4 Web Systems envisions
that transparency and engagement will be the underlying philosophy of
the IR website of the future.
A large part of this philosophy will be based on interacting via
social channels with the company and other investors.
A good IR website makes it easy to access content. One way to
accomplish this is by using tools to help investors search, sort and
organize data. For example, Daimler has a feature that lets users look
up press releases by year and category. Other searchable information
can include events by topic, month and year, which
Most popular content
Savvy investors are accessing company websites to gather information
to make informed investment decisions. They are also increasingly
signing up for and sharing ideas and information with other investors
on social networks, so they will be interested in seeing what their
friends are looking at on a company’s website and on social media
channels. One way to help achieve this is to provide a snapshot of the
most popular content being sought after, prominently displayed on the
Online conversations about companies are on the rise. A good way to
stay apprised of these conversations is through an amalgamated
discussion section. This section would incorporate a mash-up of
conversations about your company (as well as your peers) on social
networks. It would also track trending themes and sentiment analysis
by providing analytics from the social web. This section would help
IROs monitor the conversations as well as help mitigate potential
rumors from misinformation and respond in a timely manner.
Access to the C-suite and transparency are two top concerns for
investors. This section would list all public events available to all
investors where they could interact face-to-face with management. For
example, investors could sign up for an earnings call and be brought
into a virtual meeting room like
PGI’s iMeet. The same concept would apply to annual meetings and
investor days. Similarly, there would be a private sign-up for
institutional investors to book meetings with management.
FAQs are a useful way to reduce investor calls. The IR department
should regularly add any new questions to this section and think
outside the box to come up with other potential inclusions. Potash is
an innovator in this area, segmenting questions by category. It also
gives investors the option to filter and even the opportunity to
suggest a question. Q4 also envisions a ‘real-time’ FAQs feature where
investors can submit their questions and the most recent (provided
it’s ‘new’) will stay on top so others can see it.
Financial information is a key metric investors use to decide whether
they want to buy shares, so it is essential to make it easy to
download and analyze this information. For example, Agnico-Eagle – a
Q4 client – has a
financial and operating database that gives analysts a full set of
quarterly financials and fundamentals (delivered through a browser or
as Excel downloads), customizable charts and the facility to share
content from the model through email and social networks.
Investors today are more discerning and want to receive selected
information. Offering segmented email alerts gives investors the
opportunity to select the type of information they want. For example,
TVI Pacific – another Q4 client – has a very comprehensive
‘Connect with us’ page with integrated RSS feeds so investors can
sign up for news releases, events and presentations. This section
would also allow investors to choose where they wanted this
information sent: to Twitter, Facebook or other social media channels
where they are active.
Comprehensive contact information
Companies are making themselves more accessible by providing
comprehensive contact information. For example, in addition to direct
phone numbers and email addresses for the IR team, companies like
providing headshots of the IR contacts. Companies will
increasingly provide a link to their LinkedIn profile and those of
each member of the IR department.
Whether a site visitor is a potential, new or long-term investor,
providing links to recent news or events is typically highly
sought-after information. One way companies highlight what’s new is by
linking to the latest press releases, transcripts and upcoming events,
or to the latest updates made on the IR website, like
Danske Bank. This section would also use highly visual links to
corporate video housed on YouTube or most recent presentations housed
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